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Discussion Starter · #1 ·
Hello,
I've never filed a Canadian tax return (as I grew up and still reside in the US), but I'm now considering moving to Canada.

I moved to the US as a young child, obtained Permanent Resident status in the US shortly thereafter, and eventually obtained US citizenship (albeit much, much later at 27, three years ago). I haven't lived in Canada since I emigrated, but I have applied for (and received) a Canadian passport (since this was the only passport I was eligible for until a few years ago). Additionally (if it matters at all), I registered for (and received) a Canadian Social Insurance Number shortly after obtaining US citizenship (hopefully this does not come back to haunt me...).

I am wondering two things:

1) Do I have any sort of tax obligation to the Canadian government on income I've made here in the US, even though I've not had any residential/financial ties with Canada since I was a young child?

and

2) What should I be expecting in terms of taxation (double-taxation, etc.) after moving back to Canada?

Thanks!
 

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The US is about the only "civilized" country that attempts to tax its citizens when they are resident outside its borders - so you should be just fine on the Canadian side when you return.

Now that you've taken US citizenship, you are subject to US taxation no matter where in the world you live. Your 'earned income" (i.e. salary and most forms of work-related income) are subject to the "foreign earned income exclusion" - which means you declare them to the US government but then can subtract them up to the limit (currently about $92K).

Interest and other forms of "unearned" income all have to be declared to the IRS, but you then take a tax credit for income taxes paid on this income to Canada (or any other foreign government).

You also remain subject to all the financial reporting requirements (FBAR and FATCA, primarily) once you have bank or other financial accounts over $10,000. A higher threshold applies to the FATCA reporting ($200,000), though it includes all sorts of "financial assets."

In theory, you shouldn't be double taxed on your income - though finding the "correct" way of reporting to avoid double taxation can be something of a challenge.
Cheers,
Bev
 

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Discussion Starter · #3 ·
Thanks for the response (and a speedy one at that)! Very good to know!

At the risk of being greedy, there was actually a third question that I neglected to include that I hope you might be able to help with -- I heard something along the lines of some kind of treaty between the two countries recognizing contributions to each other's social security/pension plans. I have no idea where I will be retiring (or the way things are going, *if* I'll ever be retiring), but how are the contributions recognized by the other country, and is it possible to be eligible for *both* plans under any circumstances?

Thanks again!
 

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I don't know the specifics for Canada, but it certainly is possible to draw retirement benefits from both plans. (I certainly am planning to do so for France and the US.)

The social security treaties are pretty unreadable (like most legalese), but generally what they provide for is that you can count the quarters or years you worked in the "other" country and paid into the other country's social security system, if you need the credits to qualify for a benefit. They normally don't give you credit for the amounts you earned (like in figuring your benefit level) in the other country.

Under the US social security system, you need 40 quarters of credits to qualify for benefits when you reach retirement age (and who knows what that will be in the future!?). That's only 10 years, so not too hard to do. But your benefits at that point will be calculated based on what your income levels were while working in the US. And, unless they repeal the WEP - Windfall Elimination Provision - there is a reduction in your US social security benefit if you are eligible for a foreign government pension of any sort. If you sign up to receive annual US Social Security statements, they'll explain the WEP bit to you and indicate the maximum reduction.

I'm told that in most of the social security treaties with the US, the other government does something similar. Here, in France, for example we need 40 or 42 YEARS of paying in to qualify for a full pension. They apparently count the years I worked in the US, but not my income back there for those years.
Cheers,
Bev
 

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If you live in Canada, you are taxed on your worldwide income and need to report property owned abroad that I think exceeds $100k in value.

So the year you move to Canada, if you worked in the US for part of the year, you will need to report that income to Revenue Canada, and you will pay tax at Canadian rates on that income. But you won't be double-taxed as you will receive a credit for the amount of tax you paid to the US (which will most certainly be less than you would owe in Canada).
 
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